ABSTRACT

This chapter presents the wage and income equations of the ECESIS model. It reviews several regional wage models and then derives and gives the estimation results of the ECESIS wage model. The leading region-leading sector approach used is found to be quite robust and simple to use. The chapter also presents the state personal income accounts. These are closely related to the wage equations because of the dominance of wage income in the accounts. It provides specification and estimations of the other endogenous income i terns. The determination of wage rates is a central issue in the specification of regional econometric models. The nonmanufacturing wage is assumed to be primarily determined by what happens to the leading manufacturing wage in the same region. Dividend, Interest and rental income is modelled as a function of gross manufacturing profits, the US prime interest rate and the consumer price index. Nonfarm proprietors' income measures the net business earnings of owners of unincorporated nonfarm enterprises.